COURT OF APPEAL FOR ONTARIO

CITATION: Zesta Engineering Ltd. v. Cloutier, 2014 ONCA 762

DATE: 20141030

DOCKET: C52951 and C52999

Laskin, Gillese and Pardu JJ.A.

BETWEEN

Zesta Engineering Ltd.

Plaintiff (Appellant)

and

David Cloutier, Michael Jefferies, Hi-Cap Technologies, Guiseppe Durante, Keith Sanger, James White and Kelvin Technologies Inc., Douglas Christie, 798068 Ontario Limited and Derek Peatling

Defendants (Respondents)

AND BETWEEN

David Cloutier. Guiseppe Durante and Kelvin Technologies Inc.

Plaintiffs by Counterclaim (Respondents)

and

Zesta Engineering Ltd.

Defendant to the Counterclaim (Appellant)

AND BETWEEN

Zesta Engineering Ltd.

Plaintiff (Appellant)

and

Joe Durante and Wendy Durante

Defendant (Respondent)

Counsel:

Sarit Bather and Moya Graham, for the appellant

Morris Cooper, for the respondents Douglas Christie and 798068 Ontario Limited

Heard: October 17, 2014

On appeal from the judgment of Justice David G. Stinson of the Superior Court of Justice, dated October 21, 2010.

APPEAL BOOK ENDORSEMENT

[1] Zesta Engineering Ltd. appeals against Christie and his company on the issues of costs and pre-judgment interest.

A. Costs

[2] Zesta settled and then abandoned its appeal on liability and damages, leaving costs and pre-judgment interest as the only outstanding issues. It thus requires leave to appeal costs. See Murano v. Bank of Montreal.

[3] Zesta raises two issues requiring leave: first, it submits that the trial judge erred in failing to award costs of the first trial against Christie on the basis that as counsel he knowingly led false evidence at the first trial; and second, Zesta submits that the trial judge erred in failing to award substantial indemnity costs of the second trial. Zesta contends that both errors are errors in principle, warranting our intervention.

[4] We do not agree with Zesta’s submissions. On Zesta’s first submission the trial judge declined to award costs of the first trial against Christie because Zesta’s claim – essentially that Christie committed a fraud on the court – was not pleaded at the second trial, and thus was not the subject of any finding. This was a proper exercise of the trial judge’s discretion.

[5] On Zesta’s second submission, the trial judge was aware of the competing considerations and applied the right test in declining to award substantial indemnity costs. Again, we see no error in the exercise of his discretion.

[6] Accordingly, leave to appeal costs is refused.

B. Pre-judgment interest

[7] Zesta claimed pre-judgment interest in the Statement of Claim. Perhaps through inadvertence, pre-judgment interest was not dealt with at the close of the trial or in the submissions on costs.

[8] In our view Zesta is entitled to pre-judgment interest. There are no considerations that would warrant refusing to award it. Accordingly, the appeal on pre-judgment interest is allowed, and Zesta is entitled to pre-judgment interest on the damages award against Christie and his company from the date the cause of action arose, which is the date of conversion. The rate of pre-judgment interest shall be four per cent.

[9] Zesta was partly successful on its appeal, and is entitled to a modest costs award. We award it $5000, inclusive of disbursements and applicable taxes.